The announcement comes almost two weeks after the US Supreme Court ruled that terrorism suspects should have rights in line with the convention.
The US Senate is now looking into new ways to prosecute detainees at its Guantanamo Bay detention centre.
In a memo, Deputy Secretary of Defence Gordon England instructed US military leadership "to promptly review all relevant directives, regulations, policies, practices and procedures under your purview to ensure that they comply with the standards of Common Article Three" of the Geneva Conventions.
"You will ensure that all DoD [Department of Defence] personnel adhere to these standards," said the memo, dated July 7 and made public on Tuesday.
The Pentagon announcement appeared to be a reversal of the Bush administration's long-held stance that the Geneva Conventions do not apply to Taliban, al-Qaeda and other combatants targeted in the US-led "war on terrorism."
The court ruled that special military tribunals, which the Bush administration was hoping to use to try the terrorism suspects, were a violation of international and domestic law.
Humane treatment
The US administration, meanwhile, insisted that it all along has respected the human rights of detainees at Guantanamo Bay.
"It is not really a reversal of policy. Humane treatment has always been the standard, and that is something they followed at Guantanamo," said White House spokesman Tony Snow.
Defence department lawyer Daniel Dell'Orto said there are about 1,000 detainees in US military custody around the world, with about 450 of them at Guantanamo Bay.
He did not say where the others were being held, and reaffirmed Mr Snow's comments on human treatment.
"We believe the treatment that all detainees are receiving meets or exceeds the standards of Article Three of the Geneva Conventions," said Mr Dell'Orto, testifying at the first in a series of planned hearings on prosecuting Guantanamo inmates.
Common Article Three of the Geneva Conventions prohibits "inhumane treatment" of prisoners and requires certain basic legal rights at trial -- rules that would apparently apply to the Guantanamo inmates and anyone else in US military custody.
The clause also specifies that captured soldiers "shall in all circumstances be treated humanely, without any adverse distinction founded on race, colour, religion or faith, sex, birth or wealth, or any other similar criteria."
The new Pentagon policy applies only to those held in military custody and not to those in CIA custody, such as alleged mastermind of the September 11 attacks, Khalid Sheikh Mohammed.
Hicks included
Australian Guantanamo detainee David Hicks is among those whose rights are being restored.
His military lawyer Major Michael Mori welcomed the Pentagon's announcement.
"If they are really applying Common Article 3, then obviously his treatment should improve," he said.
"His isolation should go away, all of his reading and legal materials should be returned."
Hicks has been housed at the US military prison at Guantanamo Bay for four-and-a-half years and has spent the past three months in isolation, with no access to reading or legal material.
Originally from Adelaide, he was captured among Taliban forces in Afghanistan in December 2001, and has pleaded not guilty to charges of conspiracy, attempted murder and aiding the enemy.